This post has been updated to include mid-year changes to carrier policies due to COVID.
Every year, UPS and FedEx announce new shipping rates. This can include changes that have big effects on order fulfillment and shipping, such as new DIM factors for calculating dimensional weight pricing. The 2020 shipping rates are higher than the 2019 rates for both UPS and FedEx. This is not unexpected.
However, there is one big change in 2020 shipping rates to additional handling surcharges that will catch many shippers off guard. This includes a weight surcharge that will start at 50 pounds instead of 70 pounds. Fortunately, none of the rate and fee changes take effect until after the 2019 holiday shipping season.
If you’ve run an eCommerce business for a few years, you probably build regular shipping rate increases into your operating budget for each year. However, changes like that to the weight surcharge can be harder to factor into your pricing. If you ship products in the 50- to 70-pound range, don’t panic, but do plan. Here’s everything you need to know about the 2020 shipping rates for FedEx and UPS.
New Changes to 2020 shipping rates and policies during the pandemic
All three major US parcel delivery services announced policy or pricing changes this summer. The COVID-19 pandemic has put stress on the systems at FedEx, UPS, and USPS. Here’s what you need to know, so you can plan accordingly and reduce the stress on your supply chain.
FedEx surge pricing
In August 2020, FedEx announced new surcharges for the 2020 holiday season. The surcharges will be in effect from October 5, 2020, through January 17, 2021.
FedEx will add a surcharge of $52.50 to every oversized package sent via its express, ground, or international services. FedEx defines oversized as a package that measures longer than 96 inches or more than 130 inches in length and girth combined.
There will be an additional handling surcharge of $4.90 per package. Domestic packages that weigh more than 50 pounds fall into the special handling category. So do boxes that are longer than 48 inches on their longest side or longer than 30 inches on the second-longest side. This is in addition to other new charges FedEx imposed in 2020 (see below).
SmartPost users have an extra charge of $1.00 per package from November 2 through 29 and December 7 through January 17. The charge will be $2.00 per package from November 30 through December 6.
In addition, FedEx will assess a peaking factor on residential deliveries. Residential deliveries will be assessed an extra charge of between $1 and $4 for ground delivery. The peaking factor is calculated based on delivery volume. Please check with your order fulfillment company or your FedEx sales rep to find out what your peaking factor will be.
FedEx had added surcharges due to COVID starting June 8. These are now set to expire November 1. Those charges were $0.40 per SmartPost package, $0.30 per package for residential delivery, and $30 per oversized package.
UPS peak surcharges
UPS added peak surcharges to ground residential and SurePost deliveries starting May 31. The additional $0.30 per package fee will end on November 14, 2020. This will be replaced by holiday surcharges in effect from November 15, 2020 to January 16, 2021. The charge is between $1 and $4 per package, depending on the service and the peak factor. UPS holiday peak charges are based on your February shipment volume. If you will ship at least 110% of your February volume during the holidays, expect these peak surcharges.
UPS also instituted a $31.45 per package surcharge for customers who ship more than 500 large packages per week. This will go up to $50 on October 4, 2020. The $50 charge expires January 16, 2021. UPS uses the same dimensions to define large packages as FedEX: 96 inches long or 130 inches length plus girth.
In addition, from October 4, 2020 through January 16, 2021, UPS will add these surcharges:
- $5 per package for additional handling
- $250 per package for packages over maximum limits
USPS temporary price increase
Due to increased demand during the pandemic, the US Postal Service will increase rates for commercial customers. The temporary price bump will be in effect from October 18, 2020, through December 27, 2020. The price increases range from $0.24 to $1.50 per package, depending on the service.
Oversized Parcel Select Ground packages won’t see a price increase. For zones 8/9 for this service, 19 pound packages will stay the same price and 20 pound parcels will only see a $0.06 increase instead of $0.40.
2020 Changes to FedEx Shipping Rates
Starting January 6, 2020, FedEx rates will increase by 4.9%, on average. This increase applies to FedEx Express package and freight standard list rates. The rates apply to deliveries in the US as well as export and import into and out of the US. FedEx Ground and FedEx Home Delivery will also see a 4.9% increase.
ECommerce shippers who use FedEx Express will also see an increase to the minimum charge. FedEx International Premium®, FedEx Ground Multiweight®, and FedEx SmartPost charges will also rise in 2020. FedEx Freight 2020 shipping rates will be 5.9% higher than the 2019 rates, on average. In addition, FedEx One Rate pricing and FedEx retail rates will change.
2020 Changes to UPS Shipping Rates
UPS 2020 shipping rates go into effect on December 29, 2019. The cost to ship by UPS Ground, UPS Air, and internationally via UPS will go up 4.9% on average. UPS Air Freight will go up 4.2%. The Air Freight increase applies to packages shipped within and among the US, Canada, and Puerto Rico. Some LTL UPS freight shipments will see a price increase of 3.9% net.
Of course, the actual 2020 shipping rates that you pay will depend on the number of packages you ship. High-volume shippers may be able to negotiate lower rates with FedEx and UPS. Even if your shipping volume doesn’t justify a special rate, your order fulfillment company can help you find the best shipping rates for your eCommerce orders.
Additional Handling Surcharge Increases for 2020
Both FedEx and UPS increased their surcharges and fees for various categories of special handling. The weight and dimension surcharges may have the biggest impact on eCommerce shippers, especially those who ship heavy or oversized items.
Miscellaneous surcharges
UPS and FedEx 2020 shipping rates will include numerous surcharges in addition to weight and dimension charges. Here is just a sampling:
- Both carriers will increase their fuel surcharges in 2020.
- UPS has changed its delivery area surcharge ZIP codes.
- UPS has increased rates for packages weighing 100 pounds or more.
- UPS will assess fees for rebilling and for packages that include prohibited items.
- FedEx will increase surcharges for shipping non-stackable packages. The increase from $215 to $230 applies to US and International Express Freight.
- FedEx will increase handling surcharges for shipping dangerous goods, including packages that include dry ice.
- FedEx is increasing its delivery area surcharges.
Dimension Surcharge
FedEx’s dimension surcharge will increase by 11%, from $13.50 to $15.00. This charge applies to International and US Express and Ground services. These charges apply to oversize packages. FedEx defines this as boxes where the longest side is over 48 inches or the second-longest side is over 30 inches.
Both UPS and FedEx apply a large package or oversize surcharge to domestic packages longer than 96 inches. The UPS large package surcharge also applies to boxes where the longest side plus double the width and double the height is more than 130 inches. UPS bills these packages at a minimum billable weight of 90 pounds. The large package surcharge takes the place of other additional handling charges. FedEx will no longer use the 90-pound billable weight for FedEx Express International, but will retain it for domestic shipments.
Both UPS and FedEx use DIM weight pricing to adjust shipping charges. Neither has announced changes to the DIM factor used to calculate dimensional weight for 2020 as yet.
Major Change to 2020 Shipping Rates for Some Large Items
By far the biggest change in 2020 shipping rates is the weight surcharge. Both FedEx and UPS had previously levied a surcharge on packages weighing 70 pounds or more. Both increased the amount of the surcharge as part of their 2020 shipping rates. The FedEx weight surcharge went up 20%, from $20 per package to $24. The UPS weight surcharge will also increase to $24.
However, the most consequential change in this surcharge is the number of shipments it will apply to. Both carriers reduced the limit for the weight surcharge to 50 pounds. The FedEx change applies only to domestic US packages shipped by Express or Ground service. Import and export shipments from and to the US will continue to have the 70-pound limit for the weight surcharge.
While the vast majority of eCommerce parcels weigh less than 50 pounds, this change could double the number of packages subject to the weight surcharge. When you add this to other increases in 2020 shipping rates and surcharges, it means a steep price jump. Businesses shipping products that fall into the 50- to 70-pound range could see their shipping costs more than double.
There’s no question that this will present a challenge for some eCommerce businesses. If you sell products that are newly subject to the weight surcharge, this is a moment to marshal your forces and reach out for help.
Red Stag Fulfillment Keeps Large-Item Shipping Affordable
At Red Stag Fulfillment, we are experts at eCommerce order fulfillment.
We started shipping large, heavy, and high-value products, but are expanding our roster of partners and capabilities. We pride ourselves on providing secure and economical shipping for our clients. We ship thousands of packages that weigh over 50 pounds each year, so we take any change to shipping rates seriously. The additional handling surcharge for 50-pound packages would have applied to about 20% of the orders we shipped in 2019.
The weight surcharge will affect many eCommerce companies, including many of our clients. We are committed to working with merchants to develop strategies that reduce the impact of this surcharge in 2020. Whether you are currently a Red Stag Fulfillment client or not, we are happy to talk with you about how to manage your shipping costs for items over 50 pounds.
Changes in shipping costs are among the biggest hurdles for eCommerce companies. However, your business can weather the new weight surcharge with advance planning and a good fulfillment partner.
